You can’t build a long-term future on short-term thinking

27/08/2019
Posted in Blog
27/08/2019 Mduduzi Luthuli

People always talk about long-term investing without defining what it means.

To me, long-term investing means you don’t act out of emotion. It means that your goals don’t fluctuate with the market. It means having a plan and sticking to it.

The biggest reason people struggle with long-term investing is their desire to tinker, to do something, to react.

Like Pascal said, “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.”

What is crystal clear is that over time (multiple decades NOT months), stocks go up. But they only go up because they’re risky, which means sometimes they go down. They go down a lot and stay there for long periods of time.

The most successful investors can ignore the things today that they know won’t matter tomorrow.

They practice long-term thinking, hard as it may be, because they are aware of the potential reward and are willing to pay the fee (loss-aversion bias) for the journey (volatility) in order to arrive at their destination (compounded growth).

Believe this is true or stay away from the stock market. Nobody can, and should, force you to invest your money, over multiple decades, into something you have no conviction in.

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Any fool can know. The point is to understand - Albert Einstein